A tale of two banks…

Barclays results out today show that the credit crunch is hitting different banks in different ways.  Profits were a whopping £7.08bn, only 1% down on last year’s record.  That doesn’t sound like an industry in crisis.  You might be thinking “what credit crunch?”

However, the Northern Rock fiasco, coupled with Bradford & Bingley’s grisly profit figures clearly continues to dampen the sector.

When you consider that so called mortgage banks, Northern Rock and B&B, have little exposure to the US housing market (which caused Barclays to write down $1.6Bn), you have to wonder whether it is in fact the British housing market that is in crisis.

I mentioned after the last Barclays trading update, increased confidence in the credit card operation and this seems to have been well placed with profits up by one fifth.  Perhaps the diversified banking model is the only one that can survive these turbulent times.  Is the role of the little guy, focussed on one specific banking niche, dead?  Is it necessary to have a balanced portfolio of businesses within a bank to ride the swings and roundabouts of outrageous misfortune?

Perhaps it is time for Barclays to bid for Bradford & Bingley, before one of the American banks steps in to get it on the cheap.

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